DATE: November 4, 2024
TO: Mayor and Members of the City Council
President and Members of the Estero Municipal Improvement District (EMID) Board of Directors
VIA: Stefan Chatwin, City/District Manager
FROM: Waqas Hassan, Assistant Finance Director
SUBJECT: FISCAL YEAR 2023-24 FOURTH QUARTER FINANCIAL UPDATE
RECOMMENDATION
It is recommended that the City Council/EMID Board of Directors, by Minute Order, receive and accept the report on the FY 2023-24 Fourth Quarter Financial Update.
EXECUTIVE SUMMARY
Attached is the FY 2023-24 Fourth Quarter report (Attachment 1). With the effects of the COVID-19 pandemic fading away, the City’s transient occupancy tax (TOT) is now marginally below the pre-pandemic level; however, many of the other General Fund (Funds 001 to 003) categories have now reached or surpassed pre-pandemic revenue levels. Growth in property tax, including robust Educational Revenue Augmentation Fund (ERAF) receipts, the State's backfill of property tax in lieu of vehicle license fees, and better than expected sales tax revenues culminated in an overall positive actual to budgeted revenue results. FY 2023-24 General Fund revenues and expenditures totaled $63.5 million and $53.0 million respectively, while Net Transfers Out was $3.52 million. Transfers Out included $6.0 million to the City’s Capital Improvement Projects Fund and $63,564 to the Housing Successor Fund for 20% of the loan repayment from the Successor Agency. Transfers In of $21,948 were from the Foundation Fund for the summer concerts.
Total General Fund (Funds 001 to 003) revenues exceeded adopted budget estimates by $5.5 million. Property tax revenues beat expectations by $2.9 million as assessed value growth was aided by gains in the price of home sales, completed development
projects, and better than conservatively budgeted ERAF revenues. Property tax In- Lieu of Vehicle License Fee revenues was $608,000 lower than budget as the current year shortfall was higher than the State provided backfill from prior periods. Sales tax revenues were slightly below budget by $229,000. TOT revenues are now marginally below the level of the $4.39 million high back in FY 2018-19 and the recovery trend is promising. Due largely to the 350 basis points rise previous years in the Federal Funds rate orchestrated by the Federal Reserve to combat inflation and strong demand for facility use and rentals, interest and rental income continued to do better, which is $1.4 million higher than originally forecasted.
General Fund (Funds 001 to 003) expenditures savings (as compared to the amended budget) totaled $6.5 million as each department finished out the fiscal year within their respective General Fund budgets, with the largest favorable variances coming from Police, Public Works, Parks and Recreation, Community Development, City Manager Office, and Human Resources of $1,807,000, $1,244,000, $944,000, $754,000, $342,000 and $337,000 respectively. The combination of employee retirements/separations and a very tight labor market resulted in many unfilled vacancies, which contributed to both employee services expenditure savings as well as supplies and contract services savings from the lack of personnel.
The City’s June 30, 2024 Unrestricted General Fund balance (Funds 001 to 003) was approximately $63.1 million or 100% of FY 2024-25 budgeted expenditures. This level is well above the 50.0% reserve policy level established by the City Council. The City's Capital Improvement Projects fund, Internal Service funds, and the District's water and wastewater enterprise funds also ended the fiscal year with generally healthy reserve levels.
BACKGROUND/ANALYSIS
The City Council/EMID Board and City staff have committed to provide quarterly financial updates at City Council meetings to review quarterly financial performance and identify general economic trends and specific issues that may affect, positively and negatively, the City’s financial situation.
The report is intended to provide high level financial information for the City Council, City Departments, and the community as a whole. Supplemental revenue and expenditure analyses are also provided for those readers desiring more detailed financial information.
FISCAL IMPACT
There is no fiscal impact with the acceptance of this report.
CITY COUNCIL VISION, MISSION, AND VALUE/PRIORITY AREA
Staff Empowerment and Operational Excellence
ATTACHMENTS:
Attachment 1 - Foster City Financial Update FY 2023-24 Q4 (for the twelve months ended June 30, 2024)
Attachment 2 - Changes in Fund Balances (for the twelve months ended June 30, 2024) Attachment 3 - Comparison of Budget vs. Actual and Prior Year’s Revenues (for the twelve months ended June 30, 2024)
Attachment 4 - Comparison of Budget vs. Actual and Prior Year’s Expenditures (for the twelve months ended June 30, 2024)